Adani group’s market value drops under $100 billion

Adani Group building.
| Photo Credit: The Hindu

The combined value of Adani Group’s 10 companies — including Adani Ports, Adani Green Energy and Power — fell below the $100 billion mark on February 21, weeks after a searing report by the U.S. short-seller Hindenburg Research.

Overall, the Adani Group has lost more than $135 billion in market capitalisation since January 24, when Hindenburg alleged rampant stock manipulation and fraud by the conglomerate. The Group has repeatedly denied all charges. The Group has struggled to reassure investors since; stocks of publicly listed companies have taken a beating. On February 1, the Group called off its ₹20,000 crore follow-on public offer and decided to return the money that it had collected from investors citing volatile circumstances.

The stock market on Tuesday reflected similar uneasy sentiments: four out of 10 firms traded lower, according to Bloomberg. The most significant drop was experienced by Adani Total Gas, which lost out on approximately 77% of its equity value since January 24; followed by Adani Green Energy and Transmission. Adani Enterprises was down by 54% and Adani Power by 38% respectively.

A rout in the company share prices has also put a dent in billionaire Gautam Adani’s net worth, pulling it down to $49.10 billion. As of January 31, he was no longer among the world’s top 10 richest people, further slipping from the 2nd to 25th rank on the list.

On February 18, index provider FTSE Russell confirmed it will proceed with “scheduled index review changes for changes for the Adani Group (India) and its associated securities”. This comes days after Morgan Stanley Capital International (MSCI) announced similar weighting changes for four Adani stocks. MSCI later delayed the changes for two of them.

Adani Group has been focusing on debt repayment and repaying short-term commercial papers debt instead of rolling them over. Earlier this month, a spokesperson told Reuters Adani Ports and Special Economic Zone planned to prepay ₹10 billion in commercial papers maturing. This came after payments worth ₹15 billion to SBI Mutual Fund and ₹5 billion to Aditya Birla Sun Life Mutual Fund respectively.

The Supreme Court said it will constitute an expert committee to examine the existing regulatory regime and frameworks in the securities market to ensure investors’ interests are safeguarded against share value meltdowns, as was the case with Adani Group.